SOMETIMES OPPORTUNITY KNOCKS
I mentioned the other day that I thought the Bond market was ripe for a decline. Little did I know that a trade would come up so quickly. As you can see above, I shorted the Ten Year Notes this morning getting filled when the revision to the GDP report came out. I shorted this market instead of the 30 yr because I felt the chart pattern was weaker. It is essentially the same trade either way.
There is really not anything that jumps off the page with the trend oscillator other than it is showing to be weaker than the price indicates. The main reason I did this trade was as follows. I mentioned the other day that I thought this market was setup for a decline based on COT statistics. I also told everyone in here the other day that the new software anaysis tool was forecasting a sharp rise in stocks and currencies for the next few days. Since the bond market and stock markets have an inverse relationship right now, and the pattern was better for the short in the bonds than a long in the ES, I went with the Bonds. As I have stated in here for the last year, the market correlations make all these trades the same. You have to pick one otherwise you are risking way too much on one market bet. I hate this, but it is what it is.
The main reason I felt the pattern was better is the false breakout that you can see on the chart above, where we closed on new highs, then had no follow through at all the following day. I reasoned that with everything else going on that I just mentioned, if we broke below the last 2 days lows it would be a good shorting opportunity. I actually front ran those lows by a few ticks thinking there might be some slippage at those levels on the report. Either way the price has traded through any logic short entry levels now for short term trading.
We see what I call one day wonder trades often nowadays, so this could very well be one of those. This is what I call those days that move big just for one day and blow their load on that same day, then completely reverse. One thing you learn over and over as a trader, is not to wave to the crowd too soon. Unexpected moves happen all the time, and this market has not moved anywhere near enough to mean anything yet.
I did also want to short the EURO on Monday and or buy the DX. However, depending on how far things go here, those trades could be off the board. Here is the EURO daily chart. At this point although the trend is still down, it is on the verge of having turned sideways. We will have to see how this trades the rest of the day. If the rally in stocks does not stick, which is a distinct possibility since we have had a number of late day selloffs lately, the EURO could come back down enough to set it up for a short on Monday. It is just too soon to tell here.
I am short on time today, so that is all I have. Have a great weekend and good luck trading today.